It is indispensable to remove CO at the level of less than 50 ppm in H2-rich feed gas for the proton exchange membrane (PEM) fuel cells. In this paper, catalyst with high activity and selectivity, and a microchannel reactor for CO preferential oxidation (PROX) have been developed. The results indicated that potassium on supported Rh metal catalysts had a promoting effect in the CO selective catalytic oxidation under H2-rich stream, and microchannel reactor has an excellent ability to use in on-board hydrogen generation system. CO conversion keeps at high levels even at a very high GHSV as 500,000 h-1, so, miniaturization of hydrogen generation system can be achieved by using the microchannel reactor.